Daily Market Update 10 February 2014 - Markets hardly blue as NFP goes 2 from 2
Making it two disappointing non-farm payrolls reports in a row, the pace of US hiring continued to splutter in January with a net increase in payrolls of 113k reported. The figure was down on forecasts for a rise of 180k and came on the back of an upwardly-revised but still equally-unimpressive 75k increase in December. While the headline jobs number disappointed, there was plenty of good news elsewhere within the report with unemployment dropping by 0.1% to 6.6%, the lowest level seen since October 2008. As opposed to most other occasions of late, the drop was driven by a rise in the number of persons employed, +616k in total, with participation actually increasing by 0.2% to 63.0%. Elsewhere it was largely as expected with average hourly earnings rising 0.2% after flat growth in December while the average work week held steady at 34.4 hours for a second-consecutive month.
US consumer credit surged in December with an increase of $18.76b reported. The figure was well ahead of the $12.4b increase of November and expectations for a decline to $12.0b with the monthly expansion the largest seen since February 2013. Revolving credit increased by $5b while non-revolving credit, namely student and auto loans, increased by a further $13.8b.
Canada’s unemployment rate fell sharply in January with a decrease to 7.0% reported. The figure was below both the 7.2% rate of December and expectations for a decline to 7.1% with unemployment now nearing the 6.9% trough reached in November 2013. A 29.4k increase in employment, led by a 50.5k surge in the size of the full time workforce, coupled with a further decline in participation to 66.3% (-0.1%), were the chief catalysts behind the surprisingly-large monthly decline.
Germany’s trade surplus narrowed sharply in December, falling to +€14.2b from +€19.1b in November. The result was below expectations for a decline to +€17.3b with imports and exports, down -0.6% and -0.9% on month, coming in well below market expectations.
A case of the good, the ok and the bad for European industrial production figures released on Friday with Spain impressing to the upside while the UK and Germany underwhelmed to the down. Starting with the good news first, Spanish industrial output rose strongly in the year to December with an increase of 3.5% reported. The reading was well above the downwardly-revised 0.1% contraction of November with output now expanding at the fastest pace seen since August 2013. Onto the ‘ok’ release with UK industrial production expanding by a further 0.4% in December. The figure was below expectations for a rise of 0.6%, something that was dragged down by slower-than-forecast manufacturing growth, with the annualised expansion slowing to four-month low of +1.8%. Last but not least, the bad figure came from Germany with a monthly contraction of 0.6% reported. While it came on the back of an upwardly-revised 2.4% increase in November, the reading was below expectations for an increase of 0.2% and left the annualised expansion at a two-month low of 2.6%.
UK economic growth is predicted to have accelerated in the three months to January, at least according to the latest forecast from the NIESR, with an expansion of 0.8% expected. If correct, the pace will be some 0.1% above that seen in the three months to December.
Indian GDP is expected to bounce modestly in Q1 2014 with the government forecasting an annualised increase of 4.9%. If accurate, the growth rate will be some 0.4% higher than the 4.5% rate struck in the year to Q4 2013.
The Day Ahead (All times AEDT)
The ASX 200 looks set to start the week firmly in the black with SPI futures pointing to a rise of 37pts on the open.
Having tried-and-failed to break above .9000 following Friday’s non-farm payrolls report, the AUDUSD has opened the week in what is now familiar territory at .89XX. With little on the data front to dictate direction, we expect the pair to range trade throughout the course of Asian session. Support is found at .8940, .8929 and .8923 with resistance kicking in at .8981, .8899 and again at .9022.
Regional data out today includes trade, bank lending and consumer confidence figures from Japan.
A relatively-quiet data calendar to begin the week with industrial production figures from France, Italy and Greece, Eurozone Sentix survey, Canada housing starts, French business sentiment and Greek CPI the only releases of note.